Revisiting tax morale: evaluating the acceptability of business- and individual-level non-compliance on participation in undeclared work

Abstract

Purpose

The aim of this paper is to evaluate whether the acceptability of different types of business- and individual-level non-compliance has different impacts on the likelihood of participation in undeclared work.

Design/methodology/approach

To evaluate this, data is reported on the EU27 and the UK from the special Eurobarometer survey no. 498, using a novel statistical methodology that deals with two potential sources of bias: sample selection error (avoidance to answer to the question about participation to undeclared work) and misclassification in the response variable (false statements about engagement in undeclared work).

Findings

This reveals the association between tax morale and participation in undeclared work. It shows that citizens find far more unacceptable undeclared work conducted by firms than individuals, but both are significantly associated with participation in undeclared work although the greatest effect is clearly exerted by individual-level tax morale.

Originality/value

This paper uses a methodology that accounts for the potential bias related to sample selection error and misclassification in the response variable of participation in undeclared work and sheds light on different components of tax morale.

Citation

Arezzo, M.F., Williams, C.C., Horodnic, I.A. and Guagnano, G. (2023), "Revisiting tax morale: evaluating the acceptability of business- and individual-level non-compliance on participation in undeclared work", International Journal of Manpower, Vol. 44 No. 5, pp. 952-966. https://doi.org/10.1108/IJM-11-2022-0543